Pension puzzle
While the numerous arguments for and against independence have touched on the fact that, with a smaller workforce in Scotland to contribute towards state pensions – compared with the greater number of UK taxpayers, both in respect to the number of pensioners in each case – none of the parties, to my knowledge, has addressed the numbers involved.
The UK state pension will be £148.40 per week after April 2016 while the Scottish Government has proposed £160 per week.
In the UK there are 29.73 million workers earning an average annual salary of £26,500 – £16,500 of which is taxable after deducting the tax-free allowance.
This generates tax revenue, at 20 per cent, of £98.1 billion. The UK as a whole will have 9.22 million pensioners receiving an annual pension of £7,716.80 which will cost £71.15bn. This leaves a surplus of £26.95bn.
In Scotland there are 2.56 million workers earning an average annual salary of £26,431.00 – £16,431.00 of which is taxable.
This generates tax revenue, at 20 per cent, of £8.37bn. Scotland will have 1.02 million pensioners receiving an annual pension of £8,320 which will cost £8.49bn. This leaves a deficit of £120m.
There are 64.1 million people in the UK and 5.3 million people in Scotland. This gives a surplus, per head, of £420 for the UK population as a whole and a deficit of £22, per head, for the population of Scotland.
This would mean that, on personal taxation alone, every person in an independent Scotland would be £442 per year worse off than if Scotland were to stay within the UK.
I appreciate that there are other sources of income – but there are also many other outgoings to be paid for.
While oil revenues will contribute to the Scottish budget, these are expected to diminish considerably by the year 2050 – at which time Scotland’s younger voters will be reaching pensionable age. Where then will their pensions come from?
George Holliday
Bridge of Allan